The US government can currently borrow for 30 years at a real (inflation-adjusted) interest rate of 1% per year. Suppose that the US government were to borrow an extra $500 billion over the next two years and spend it on infrastructure – even unproductively, on projects for which the social rate of return is a measly 25% per year. Suppose that – as seems to be the case – the simple Keynesian government-expenditure multiplier on this spending is only two.

In that case, the $500 billion of extra federal infrastructure spending over the next two years would produce $1 trillion of extra output of goods and services, generate approximately seven million person-years of extra employment, and push down the unemployment rate by two percentage points in each of those years. And, with tighter labor-force attachment on the part of those who have jobs, the unemployment rate thereafter would likely be about 0.1 percentage points lower in the indefinite future.Continue Reading »

If this baseball season produces nothing else of note, the fans shouldn’t be too disappointed. Wednesday night’s incomparably thrilling down-to-the-wire four-city wild-card rumpus will be hard to top.

But the 2011 postseason, which starts Friday, does have the potential to create another anomalous spectacle worth staying up late for: the best pitching matchup in World Series history.

Should the American League’s Detroit Tigers and the National League’s Philadelphia Phillies advance to the Fall Classic with their current rosters intact, the first game between them would likely pit Philadelphia ace Roy Halladay, who has 19 wins, 220 strikeouts and a 2.35 earned-run average, against Detroit’s Justin Verlander, who has 24 wins, a 2.40 ERA and 250 strikeouts.

By the numbers, these are the two best pitchers in baseball this season. But they’re also two of the best pitchers to climb a mound in the last 10 years. Together, they’d be better than the pairing of Sandy Koufax and Whitey Ford in 1963, better than the duo of Koufax and Jim Kaat two years later and better than the famous 1948 showdown between Bob Feller of the Cleveland Indians and Johnny Sain of the Boston Braves.

If Halladay and Verlander met in the World Series, they’d be one of the six highest-rated pairings ever and, of that elite group, the most evenly matched. Ricky Bottalico, a former pitcher who’s a baseball analyst for Comcast SportsNet in Philadelphia, calls the possible matchup a tantalizing one. “Those two guys are so far beyond anyone else,” he says.